8-K: Atlantic Union Bankshares Outlines Growth, 2028 Vision

Atlantic Union Bankshares Corporation presented its strategic priorities, updated financial outlooks for 2025 and 2026, and medium-term financial targets at its Investor Day, emphasizing organic growth and digital transformation.

Summary

• Atlantic Union Bankshares Corporation (AUB) is the largest regional bank headquartered in the lower Mid-Atlantic, operating 178 branches across Virginia, North Carolina, Maryland, and Washington D.C.
• As of September 30, 2025, AUB reported $37.1 billion in assets, $27.4 billion in loans, and $30.7 billion in deposits.
• The company has demonstrated significant growth, with total assets growing at a 20% Compound Annual Growth Rate (CAGR) and organic assets at a 7% CAGR from 2017 to Q3 2025.
• Strategic priorities include fully integrating the Sandy Spring acquisition, building scaling capabilities, delivering organic growth, innovating with technology, and making strategic investments while deprioritizing whole bank acquisitions.
• The updated 2025 financial outlook projects full-year Net Interest Income (FTE) of ~$1.160-$1.165 billion and a Net Interest Margin (FTE) of ~3.75%-3.80%.
• The 2026 financial outlook anticipates loans of $29.0-$30.0 billion and deposits of $31.5-$32.5 billion, with Net Interest Income (FTE) of ~$1.350-$1.375 billion and a Net Interest Margin (FTE) of ~3.90%-4.00%.
• Medium-term financial targets (2026-2027) aim for a Return on Tangible Common Equity of 19%-20%, Return on Assets of 1.4%-1.5%, and an Efficiency Ratio (FTE) of 46%-48%.
• AUB plans to expand its North Carolina footprint with 10 new branches over the next three years, specifically 7 in Raleigh and 3 in Wilmington.
• The company is investing heavily in technology, including Artificial Intelligence (AI), to enhance customer experience, improve operational efficiencies, and strengthen risk and fraud management.

Sentiment

Score: 9

Explanation: The filing presents a highly positive and confident outlook, detailing a clear strategic roadmap, strong historical performance, ambitious but achievable financial targets, and significant investments in future growth areas like technology and new markets. The company's capital position is robust, and its commitment to shareholder returns is evident.

Positives

• Strong historical growth with a 20% Total Assets CAGR and 7% Organic Growth CAGR from 2017 to Q3 2025.
• Achieved top-quartile performance in Adjusted Operating Return on Tangible Common Equity (19.7% YTD 2025) and Adjusted Operating Efficiency Ratio (50.5% YTD 2025) compared to peers.
• Maintains a solid capital position with a Consolidated Common Equity Tier 1 (CET1) ratio of 9.9% at September 30, 2025, which is within its target range of 9.5%-10.5% and well above regulatory minimums.
• Consistent dividend growth with a 7% 8-year CAGR and a target payout ratio of 35%-45%, currently at 42% YTD 2025.
• Clear strategic roadmap focused on organic growth, digital transformation, and maximizing the potential of recent acquisitions like Sandy Spring Bank.
• Planned expansion into North Carolina with 10 new branches and 86 off-site ATMs over the next three years, targeting attractive submarkets.
• Commitment to leveraging fintech partnerships and AI to enhance customer experience, operational efficiency, and risk management.
• Projected double-digit Tangible Book Value growth per share of 12-15% in 2026.

Negatives

• The 2025 YTD Adjusted Operating Return on Assets (1.26%) is at the peer median, not in the top quartile (peer top quartile is 1.41%).
• Key economic assumptions for 2025 and 2026 include an expectation for the Virginia, Maryland, and North Carolina unemployment rate to rise, although it is projected to remain below the national rate.

Risks

• Market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, funding costs, and loan and securities portfolios.
• Economic conditions, including inflation and recessionary conditions and their related impacts on economic growth and customer and client behavior.
• Volatility in the financial services sector, including failures or rumors of failures of other depository institutions, along with actions taken by governmental agencies to address such turmoil, and the effects on the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital.
• Legislative or regulatory changes and requirements, including changes in federal, state, or local tax laws and changes impacting the rulemaking, supervision, examination, and enforcement priorities of the federal banking agencies.
• The sufficiency of liquidity and changes in our capital position.
• General economic and financial market conditions in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels, U.S. fiscal debt, budget and tax matters, U.S. government shutdowns, and slowdowns in economic growth.
• The impact of purchase accounting with respect to the Sandy Spring acquisition, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks.
• The possibility that the anticipated benefits of our acquisition activity, including our acquisitions of Sandy Spring and American National, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the strength of the economy, competitive factors in the areas where we do business, or as a result of other unexpected factors or events, or with respect to our acquisition of Sandy Spring, as a result of the impact of, or problems arising from, the integration of the two companies.
• Potential adverse reactions or changes to business or employee relationships, including those resulting from our acquisitions of Sandy Spring and American National.
• Our ability to identify, recruit, and retain key employees.
• Monetary, fiscal, and regulatory policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve.
• The quality or composition of our loan or investment portfolios and changes in these portfolios.
• Demand for loan products and financial services in our market areas.
• Our ability to manage our growth or implement our growth strategy.
• The effectiveness of expense reduction plans.
• The introduction of new lines of business or new products and services.
• Real estate values in our lending area.
• Changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements.
• An insufficient Allowance for Credit Losses (ACL) or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors.
• Concentrations of loans secured by real estate, particularly commercial real estate.
• The effectiveness of our credit processes and management of our credit risk.
• Our ability to compete in the market for financial services and increased competition from fintech companies.
• Technological risks and developments, and cyber threats, attacks, or events.
• Operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation, and integration of potential future acquisitions, whether involving stock or cash consideration.
• The potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of our borrowers to satisfy their obligations to us, on the value of collateral securing loans, on the demand for our loans or our other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on our liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of our business operations and on financial markets and economic growth.
• Performance by our counterparties or vendors.
• Deposit flows; the availability of financing and the terms thereof.
• The level of prepayments on loans and mortgage-backed securities.
• Actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences.
• Any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill.

Future Outlook

Atlantic Union Bankshares Corporation projects strong growth and improved profitability for 2025 and 2026, with medium-term targets (2026-2027) aiming for top-tier financial performance. For full-year 2025, Net Interest Income (FTE) is expected to be ~$1.160-$1.165 billion with a Net Interest Margin (FTE) of ~3.75%-3.80%. The 2026 outlook anticipates loans reaching $29.0-$30.0 billion and deposits $31.5-$32.5 billion, alongside Net Interest Income (FTE) of ~$1.350-$1.375 billion and Net Interest Margin (FTE) of ~3.90%-4.00%. The company also expects 12-15% growth in Tangible Book Value per share in 2026. Key assumptions include a 25 bps Fed Funds rate cut in December 2025 and two additional 25 bps cuts in March and June 2026, stable term rates, moderate GDP growth, and rising but below-national unemployment rates in its operating markets.

Management Comments

• "We believe AUB was built for this moment. We have invested the capital, built the platform, and assembled the team. Now is the time to demonstrate the power of what we have built delivering sustainable, top-tier performance and returns."
• "Our Enterprise Payments strategy will deliver a complete, modernized client experience by enabling business customers to send and receive payments across all major rails... in a secure, seamless, and scalable manner."
• "We are thoughtfully pursuing AI use at AUB... Near-term focus on internal productivity and low risk, non-customer facing use cases."
• "Atlantic Union is committed to achieving top tier financial performance and providing our shareholders with above average returns on their investment regardless of the operating environment."

Industry Context

The company's strategic focus on organic growth, digital transformation, and targeted expansion in attractive Mid-Atlantic markets aligns with broader industry trends emphasizing efficiency, enhanced customer experience through technology, and diversification of revenue streams. The planned expansion into specialty banking verticals and the modernization of payment systems reflect a competitive response to larger institutions and fintech disruptors. The emphasis on wealth management, particularly in light of the 'Great Wealth Transfer' estimated at $124 trillion over the next 23 years, positions the company to capture significant market opportunity in a growing segment.

Comparison to Industry Standards

• Adjusted Operating Return on Tangible Common Equity (ROTCE) of 19.7% (YTD 2025) is in the top quartile compared to its peer group (peer median 14.2%).
• Adjusted Operating Efficiency Ratio (FTE) of 50.5% (YTD 2025) is in the top quartile compared to its peer group (peer median 55.0%).
• Adjusted Operating Return on Assets (ROA) of 1.26% (YTD 2025) is at the peer median (peer top quartile 1.41%, peer median 1.23%).
• The company's capital ratios, such as the Consolidated Common Equity Tier 1 (CET1) ratio of 9.9% (Sept 30, 2025), are well above regulatory minimums (6.5%), indicating strong capital adequacy.

Stakeholder Impact

• Shareholders are expected to benefit from top-tier financial performance, consistent dividend growth (7% 8-year CAGR), potential for share repurchases, and projected 12-15% Tangible Book Value growth per share in 2026.
• Employees (Teammates) will experience cultural integration from acquisitions, comprehensive training on new systems, and opportunities for growth and empowerment through technology and new strategic initiatives.
• Customers will benefit from enhanced digital experiences, new product offerings (e.g., Instant Payments, specialized lending programs), improved service quality, and personalized advice.
• Communities will see expanded branch presence in North Carolina, continued community impact focus (e.g., first-time homebuyer grants), and support for small businesses through SBA lending.

Next Steps

• Fully integrate and execute upon the Sandy Spring acquisition.
• Continue to build infrastructure, risk management, workforce, processes, and capabilities to support scaling over time.
• Leverage core franchise to deepen relationships, grow market share, and increase operating leverage.
• Capitalize on technology to enhance organic growth, increase efficiency, and outpace customer expectations.
• Launch RTP and FedNow Receive capabilities in 2025.
• Launch RTP and FedNow Send for business clients in 2026.
• Review and optimize P-Card strategy in 2026.
• Deploy open APIs for money movement and reporting in 2026.
• Expand data-rich payments and integrated receivables tools from 2027 onwards.
• Re-platform to scale with modern Enterprise Resource Planning and treasury tech ecosystems from 2027 onwards.
• Open 10 new branches in North Carolina (7 in Raleigh, 3 in Wilmington) over the next three years.
• Expand SBA lending footprint and leverage new automated lending application.
• Expand Atlantic Union Financial Consultants (AUFC) support across the expanding footprint.
• Invest in a modern account origination platform for self-service online and in-branch experience.
• Leverage nCino for Business Banking and Blend for Consumer Lending.
• Utilize new AI tools for Quality Control, teammate training, and Chatbot capability.
• Develop a robust governance model around machine learning and artificial intelligence.
• Identify key vendor partnerships and pilot AI initiatives, focusing on internal productivity.
• Achieve AI fluency across the organization and expand AI use cases to customer-facing areas.

Key Dates

Recommendation

The filing outlines a compelling growth story with a clear strategic vision, robust financial targets, and a proven track record of successful acquisitions and operational efficiency. The company is well-capitalized, consistently returns value to shareholders through dividends, and is actively investing in technology and market expansion. The updated financial outlooks for 2025 and 2026, coupled with ambitious medium-term targets, suggest significant upside potential. While some economic headwinds are acknowledged, the proactive strategies to mitigate risks and drive organic growth position Atlantic Union Bankshares for continued strong performance, making it an attractive investment.

Keywords

Atlantic Union Bankshares, AUB, Regional Banking, Financial Services, Strategic Plan, Investor Day, Financial Outlook, M&A Integration, Organic Growth, Digital Transformation, Fintech, AI Strategy, Capital Markets, Wealth Management, SBA Lending, Commercial Real Estate, Virginia Banking, Maryland Banking, North Carolina Expansion, Deposit Growth, Loan Growth, Efficiency Ratio, Return on Assets, Return on Tangible Common Equity, Capital Management, Dividend Growth